The spiralling cost of maintaining Australia’s gas networks could ratchet up the bills of households stuck using the fossil fuel by 11 per cent a year, a new report has warned, if governments don’t take decisive policy actions like banning gas from all new-build homes.
The Energy Consumers Australia (ECA) report finds that the network component, alone, in already soaring residential gas bills could jump by 320 per cent between 2023 to 2050, or a national average of $280 per household per year to $1,170.
The ECA is calling for urgent government action to protect Australians who can’t easily quit gas.
“If we wait much longer, or if we fail to help the most vulnerable households get off the gas network, the cost and difficulty will increase significantly,” says ECA head of policy Brian Spak.
“Going all electric comes with a catch: those consumers who are unable to or choose not to leave the gas network face soaring bills as networks seek to recover costs from a shrinking customer base.
“Those facing the greatest barriers to electrification – including renters, apartment dwellers, and low-income consumers – will be hit hardest.”
Victoria already has its Gas Substitution Roadmap as does the ACT, and New South Wales (NSW) is putting together its own Gas Decarbonisation Roadmap for later this year.
But South Australia, which is closing in on being powered by net 100 per cent renewable energy generation in 2027, is at risk of ignoring the gas network death spiral.
The problem is that as more people quit gas for cheaper to run, efficient electric appliances, fewer people are left to pay for infrastructure that once kept both cities and far flung communities in gas.
Acting now is a mantra that ECA and other consumer advocates have been repeating for several years, because efforts to help renters, people on low incomes and apartment dwellers get off gas are lagging behind those to help homeowners.
This month the Australian Energy Market Commission (AEMC) issued the first of a number of rules tinkering at the edges of this problem, requiring people who disconnect entirely must pay a reasonable fee rather than the cost being passed on to remaining customers.
Work is still being done on rules that rein in owners from continuing to pad out their networks when they know gas use is declining, and requiring new connections to be paid for up front by the person wanting gas.
Modelling in the ECA’s Power Move report suggests that without more intervention, bills are going to surge in some states.
In South Australia, where more than half of homes have rooftop solar, network costs alone could surge to $2,243 a year, the ECA found.
This is not factoring in the rising cost of gas itself.
Go big, go national
The ECA is adding its voice to calls for a national electrification roadmap, an idea that means different things to different groups, but essentially asks for a national plan to guide the way out of fossil fuels.
For the ECA, it means requiring landlords to replace all gas appliances when they reach end of life with efficient, electric alternatives, 2028 targets for new home and commercial building electrification, and 2035 targets for doing this for existing social and community housing.
Earlier in April, Rewiring Australia said this looked more like a plan to get off imported oil and remove subsidies for diesel, while earlier this week Nexa Advisory CEO Stephanie Bashir told Renew Economy it covered better transmission planning to unlock constrained generation.
“Market bodies have reached the limits of their powers,” Spak says.
“We need governments to urgently create an equitable exit from gas for households and small businesses and plan for how the costs of the transition will be managed fairly for all consumers.”
At a federal level that means national targets for building electrification.
For the states it means taking actions similar to those already underway in Victoria, where electrification is incentivised and new gas connections or continuing to use gas is either prohibited or disincentivised.
But it also means governments taking the lead over regulators on how to manage the cost of both maintaining lingering parts of gas networks and decommissioning planning.
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